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Press release content from Globe Newswire. The AP news staff was not involved in its creation.
PRESS RELEASE: Paid content from Globe Newswire
Press release content from Globe Newswire. The AP news staff was not involved in its creation.

Usio Announces Third Quarter Results

November 14, 2019

Quarterly Volume an All-time Record $915 Million

Card, Prepaid Drive Quarterly Revenue Growth of 10%

SAN ANTONIO, Nov. 14, 2019 (GLOBE NEWSWIRE) -- Usio, Inc. (Nasdaq: USIO ), an integrated electronic payment solutions provider, today announced financial results for the third quarter of 2019, which ended September 30, 2019.

Louis Hoch, President and Chief Executive Officer of Usio, said, “Usio achieved record transaction processing volume in the third quarter, processing $915 million in electronic payments on our various platforms. Another quarter of record processing volume once again reflects the value that our comprehensive, industry-leading integrated technology offers our merchants, financial institutions, and independent software vendor partners. Revenues grew faster than transaction volumes, up 10% this quarter on the strength of the continued improvement in our card and prepaid businesses. It is encouraging to note volume growth in both PayFac and Prepaid, growth initiatives in which we have been heavily investing. Both business lines are showing nine-month volumes exceeding the volume levels of the prior year. We are optimistic the sequential improvements we have recently experienced in these businesses are the beginning of the strong growth we anticipate in these exciting and rapidly evolving markets. The third quarter represented another milestone in the evolution of Usio, when we changed our name as means to delineate a new beginning to represent the strength of the broad FinTech platform we have built and the wide range of integrated electronic payments solutions we provide. We have built a solid platform in healthy, growing markets where our ability to offer a comprehensive electronic payments solution will resonate strongly.”

Financial Results for the Third Quarter Ended September 30, 2019

Revenues increased 10% in the third quarter to $7.1 million, primarily due to increases in credit card and prepaid portfolios.

Gross profits were $1.5 million, up 6% from $1.5 million in the third quarter a year ago. Gross margins were 21.8% versus margins of 22.5% in the third quarter last year. Profits and the gross margin percentages were primarily due to results of our highly profitable ACH business lines as a mix of total revenues.

The operating loss was $1.2 million, up from the operating loss of $.8 million in the same quarter a year ago, but an improvement sequentially from the $1.3 million loss in the second quarter of this year. The operating loss reflects our continued commitment to investing in our growth initiatives, PayFac and Prepaid.

Adjusted EBITDA was a loss of approximately $420,000, up from the year ago loss of $61,000, and up slightly from the Adjusted EBITDA loss of $400,000 in the second quarter of this year.

Net loss for the quarter was $1.2 million, or ($0.09) per share, compared to a net loss of $800,000, or ($0.07) per share in the third quarter of 2018. The net loss from the third quarter improved sequentially from the loss of $1.3 million, or ($0.10) per share, recorded in the second quarter of this year.

Total dollars processed in the quarter were up 3% to a quarterly record $915 million.

Usio continues to be in solid financial condition. Cash and cash equivalents at September 30, 2019 were $2.6 million and the Company remains debt free.

Financial Results for the First Nine Months of Fiscal 2019

Revenues for the nine months ended September 30, 2019, increased 12% to $20.8 from the same period of 2018. All of the growth in 2019 is organic growth. Gross profits for the first nine months of 2019 were $4.4 million, up 10% from the first three quarters of 2018. The increase in gross profits was primarily attributable to the strong growth of our highly profitable ACH business over the first nine months of the year. The operating loss for the first nine months of 2019 was $3.6 million, compared to $2.9 million for the first nine months of 2018. Adjusted EBITDA for the first nine months of 2019 was a loss of $1.2 million, up from a loss of $0.6 million for the comparable period in 2018. The net loss for the nine months ended September 30, 2019, was $3.6 million or ($0.28) per share compared to a net loss of $2.9 million or ($0.24) per share for the first three quarters of 2018.

Conference Call and Webcast

Usio’s management will host a conference call with a live webcast on Thursday, November 14, 2019 at 5:00 p.m. Eastern time to provide a business update. To listen to the conference call, interested parties within the U.S. should call 1-844-883-3890. International callers should call +1-412-317-9246. All callers should ask for the Usio conference call. The conference call will also be available through a live webcast, which can be accessed via the company’s websites: www.usio.com/invest.

A replay of the call will be available approximately one hour after the end of the call through November 28, 2019. The replay can be accessed via the Company’s website or by dialing 1-877-344-7529 (U.S.) or +1-412-317-0088 (international). The replay conference playback code is 10136461. About Usio, Inc.

Usio, Inc. (Nasdaq: USIO), a leading integrated payment solutions provider, offers a wide range of payment solutions to merchants, billers, banks, service bureaus, and card issuers. The Company operates credit, debit/prepaid, and ACH payment processing platforms to deliver convenient, world-class payment solutions and services to their clients. The strength of the Company lies in its ability to provide tailored solutions for card issuance, payment acceptance, and bill payments as well as its unique technology in the prepaid sector. Usio is headquartered in San Antonio, Texas, and has offices in Austin, Texas, and Franklin, Tennessee, just outside of Nashville. Websites: www.usio.com, www.singularpayments.com, www.payfacinabox.com, www.akimbocard.com, and www.ficentive.com. Find us on Facebook® and Twitter.

About Non-GAAP Financial MeasuresThis press release includes non-GAAP financial measures, EBITDA and adjusted EBITDA, as defined in Regulation G of the Securities and Exchange Act of 1934, as amended. The Company reports its financial results in compliance with GAAP, but believes that also discussing non-GAAP measures provides investors with financial measures it uses in the management of its business. The Company defines EBITDA as operating income (loss), before interest, taxes, depreciation and amortization of intangibles. The Company defines adjusted EBITDA as EBITDA, as defined above, plus non-cash stock option costs and certain non-recurring items, such as acquisitions. These measures may not be comparable to similarly titled measures reported by other companies. Management uses EBITDA and adjusted EBITDA as indicators of the Company’s operating performance and ability to fund acquisitions, capital expenditures and other investments and, in the absence of refinancing options, to repay debt obligations.

Management believes EBITDA and adjusted EBITDA are helpful to investors in evaluating the Company’s operating performance because non-cash costs and other items that management believes are not indicative of its results of operations are excluded. EBITDA and adjusted EBITDA are supplemental non-GAAP measures, which have limitations as an analytical tool. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. Non-GAAP financial measures do not reflect a comprehensive system of accounting, may differ from GAAP measures with the same names, and may differ from non-GAAP financial measures with the same or similar names that are used by other companies. For a description of our use of EBITDA and adjusted EBITDA, and a reconciliation of EBITDA and adjusted EBITDA to operating income (loss), see the section of this press release titled “Non-GAAP Reconciliation.”

FORWARD-LOOKING STATEMENTS DISCLAIMERExcept for the historical information contained herein, the matters discussed in this release include forward-looking statements which are covered by safe harbors. Those statements include, but may not be limited to, all statements regarding management’s intent, belief and expectations, such as statements concerning our future and our operating and growth strategy. These forward-looking statements are identified by the use of words such as “believe,” “intend,” “look forward,” “anticipate,” “schedule,” and “expect” among others. Forward-looking statements in this press release are subject to certain risks and uncertainties inherent in the Company’s business that could cause actual results to vary, including such risks related to the realization of the anticipated opportunities from the Singular acquisition, the management of the Company’s growth, the loss of key resellers, the relationships with the Automated Clearinghouse network, bank sponsors, third-party card processing providers and merchants, the security of our software, hardware and information, the volatility of the stock price, the need to obtain additional financing, risks associated with new tax legislation, and compliance with complex federal, state and local laws and regulations, and other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission including its annual report on Form 10-K for the fiscal year ended December 31, 2018. One or more of these factors have affected, and in the future, could affect the Company’s businesses and financial results in the future and could cause actual results to differ materially from plans and projections. The Company believes that the assumptions underlying the forward-looking statements included in this release will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the objectives and plans will be achieved. All forward-looking statements made in this release are based on information presently available to management. The Company assumes no obligation to update any forward-looking statements, except as required by law.

Contact: Joe Hassett, Investor Relations joeh@gregoryfca.com 610-228-2110

USIO, INC.CONSOLIDATED BALANCE SHEETS

September 30, December 31, 2019 2018 -------------- -------------- (Unaudited) ASSETS Cash and cash equivalents $ 2,636,378 $ 2,159,698 Accounts receivable, net 1,158,851 1,214,355 Settlement processing assets 38,494,805 44,139,861 Prepaid card load assets 725,333 535,479 Prepaid expenses and other 212,952 101,722 Note receivable, net 108,750 108,750 ------------ - ------------ - Current assets before merchant reserves 43,337,069 48,259,865 Merchant reserves 10,201,904 12,645,803 ------------ - ------------ - Total current assets 53,538,973 60,905,668 Property and equipment, net 1,743,771 1,932,660 Other assets: Intangibles, net 2,926,427 3,676,427 Deferred tax asset 1,394,000 1,394,000 Operating lease right-of-use assets 2,547,803 — Other assets 333,422 306,757 ------------ - ------------ - Total other assets 7,201,652 5,377,184 -------------- -------------- Total Assets $ 62,484,396 $ 68,215,512 - ---------- - - ---------- - LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 240,724 $ 308,178 Accrued expenses 1,214,888 852,717 Operating lease liabilities, current portion 248,056 — Settlement processing obligations 38,494,805 44,139,861 Prepaid card load obligations 725,333 535,479 Deferred revenues 136,765 20,000 ------------ - ------------ - Current liabilities before merchant reserve obligations 41,060,571 45,856,235 Merchant reserve obligations 10,201,904 12,645,803 ------------ - ------------ - Total current liabilities 51,262,475 58,502,038 Non-current liabilities: Operating lease liabilities, current portion 2,452,686 — Deferred rent — 79,748 ------------ - ------------ - Total liabilities 53,715,161 58,581,786 Stockholders’ equity: Preferred stock, $0.01 par value, 10,000,000 shares authorized; -0- shares outstanding at September 30, 2019 (unaudited) and December 31, 2018, — — respectively Common stock, $0.001 par value, 200,000,000 shares authorized; 18,011,077 and 17,129,680 issued, and 16,901,039 and 16,043,630 outstanding at September 30, 186,442 185,561 2019 (unaudited) and December 31, 2018, respectively Additional paid-in capital 76,658,269 74,568,627 Treasury stock, at cost; 1,110,038 and 1,086,050 shares at September 30, 2019 (1,866,130 ) (1,813,546 ) (unaudited) and December 31, 2018, respectively Deferred compensation (5,585,571 ) (6,270,675 ) Accumulated deficit (60,623,775 ) (57,036,241 ) ------------ - ------------ - Total stockholders’ equity 8,769,235 9,633,726 ------------ - Total Liabilities and Stockholders’ Equity $ 62,484,396 $ 68,215,512 - ---------- - - ---------- -

USIO, INC.CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 -------------- ------------ -------------- -------------- Revenues 7,087,732 6,473,743 20,833,143 18,601,283 Cost of services 5,539,314 5,014,603 16,383,149 14,551,621 ------------ - ---------- - ------------ - ------------ - Gross profit 1,548,418 1,459,140 4,449,994 4,049,662 Selling, general and administrative: Stock-based compensation 315,259 289,038 954,770 961,893 Other expenses 1,969,877 1,519,793 5,602,171 4,613,720 Depreciation and amortization 491,749 473,225 1,475,291 1,389,164 ------------ - ---------- - ------------ - ------------ - Total operating expenses 2,776,885 2,282,056 8,032,232 6,964,777 ------------ - ---------- - ------------ - ------------ - Operating (loss) (1,228,467 ) (822,916 ) (3,582,238 ) (2,915,115 ) ------------ - ---------- - ------------ - ------------ - Other income: Interest income 20,781 23,327 66,475 50,244 Other income (expense) 608 1,423 185 (539 ) ------------ - ---------- - ------------ - ------------ - Other income and (expense), net 21,389 24,750 66,660 49,705 ------------ - ---------- - ------------ - ------------ - (Loss) before income taxes (1,207,078 ) (798,166 ) (3,515,578 ) (2,865,410 ) Income taxes 31,956 15,000 71,956 34,000 ------------ - ---------- - Net (Loss) $ (1,239,034 ) $ (813,166 ) $ (3,587,534 ) $ (2,899,410 ) - ---------- - - -------- - - ---------- - - ---------- - Earnings (Loss) Per Share Basic earnings (loss) per common share: $ (0.09 ) $ (0.07 ) $ (0.28 ) $ (0.24 ) - ---------- - - -------- - - ---------- - - ---------- - Diluted earnings (loss) per common share: $ (0.09 ) $ (0.07 ) $ (0.28 ) $ (0.24 ) - ---------- - - -------- - - ---------- - - ---------- - Weighted average common shares outstanding Basic 13,054,962 12,145,323 12,906,206 12,098,828 Diluted 13,054,962 12,145,323 12,906,206 12,098,828

USIO, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)

Nine Months Ended September 30, September 30, 2019 2018 -------------- -------------- Operating Activities Net (loss) $ (3,587,534 ) $ (2,899,410 ) Adjustments to reconcile net (loss) to net cash (used) by operating activities: Depreciation 725,291 639,164 Amortization 750,000 750,000 Provision for loss on note receivable — 72,500 Non-cash stock-based compensation 954,770 961,893 Amortization of warrant costs 26,955 — Issuance of stock to consultant for services — 7,911 Changes in operating assets and liabilities: Accounts receivable 55,504 (177,808 ) Prepaid expenses and other (111,230 ) (2,385 ) Operating lease right-of-use assets (2,547,803 ) — Other assets (26,665 ) (146,194 ) Accounts payable and accrued expenses 294,717 (45,444 ) Operating lease liabilities 2,700,742 — Prepaid card load assets 189,854 207,659 Merchant reserves (2,443,899 ) (1,374,906 ) Deferred revenue 116,765 35,000 Deferred rent (79,748 ) 58,457 ------------ - ------------ - Net cash (used) by operating activities (2,982,281 ) (1,913,563 ) Investing Activities Purchases of property and equipment (536,405 ) (584,198 ) Notes receivable — 5,000 ------------ - ------------ - Net cash (used) by investing activities (536,405 ) (579,198 ) Financing Activities Proceeds from public offering, net of expenses 1,793,905 — Purchases of treasury stock (52,584 ) (966,383 ) ------------ - ------------ - Net cash provided (used) by financing activities 1,741,321 (966,383 ) ------------ - ------------ - Change in cash, cash equivalents, prepaid card loads and merchant reserves (1,777,365 ) (3,459,144 ) Cash, cash equivalents, prepaid card loads and merchant reserves, beginning of 15,340,980 19,778,022 year ------------ - ------------ - Cash, Cash Equivalents, Prepaid Card Loads and Merchant Reserves, End of Period $ 13,563,615 $ 16,318,878 - ---------- - - ---------- - Supplemental disclosures of cash flow information Cash paid during the period for: Interest $ — $ — Income taxes 82,206 49,000

USIO, INC. STATEMENT OF CHANGES in STOCKHOLDERS’ EQUITY (UNAUDITED) Common Stock Additional Treasury Deferred Accumulated Total Paid - In Stock Compensation Deficit Stockholders’ Shares Amount Capital Equity ------------ ----------- -------------- -------------- -------------- --------------- -------------- Balance at December 31, 17,129,680 $ 185,561 $ 74,568,627 $ (1,813,546 ) $ (6,270,675 ) $ (57,036,241 ) $ 9,633,726 2018 ---------- - - ------- - - ---------- - - ---------- - - ---------- - - ----------- - - ---------- - Issuance of common stock, 769,230 769 1,793,136 — — — 1,793,905 public offering Issuance of common stock under equity 62,222 62 58,551 — — — 58,613 incentive plan Warrant compensation — — 8,985 — — — 8,985 costs Deferred compensation — — — — 224,795 — 224,795 amortization Purchase of treasury — — — (21,822 ) — — (21,822 ) stock Net (loss) for the — — — — — (1,072,889 ) (1,072,889 ) period ---------- - --------- - ------------ - ------------ - ------------ - ------------- - ------------ - Balance at March 31, 17,961,132 $ 186,392 $ 76,429,299 $ (1,835,368 ) $ (6,045,880 ) $ (58,109,130 ) $ 10,625,313 2019 ------------ - ------- - - ---------- - - ---------- - - ---------- - - ----------- - - ---------- - Issuance of common stock under equity 53,445 53 133,462 — — — 133,515 incentive plan Warrant compensation — — 8,985 — — — 8,985 cost Deferred compensation — — — — 222,585 — 222,585 amortization Reversal of deferred compensation (6,000 ) (6 ) (13,254 ) — 13,260 — — that did not vest Purchase of treasury — — — (28,693 ) — — (28,693 ) stock Net (loss) for the — — — — — (1,275,611 ) (1,275,611 ) quarter ------------ - ------------- - Balance at June 30, 18,008,577 $ 186,439 $ 76,558,492 $ (1,864,061 ) $ (5,810,035 ) $ (59,384,741 ) $ 9,686,094 2019 ------------ - ------- - - ---------- - - ---------- - - ---------- - - ----------- - - ---------- - Issuance of common stock under equity 2,500 3 92,483 — — — $ 92,486 incentive plan Warrant compensation — — 8,985 — — — $ 8,985 cost Deferred compensation — — — — 224,464 — $ 224,464 amortization Reversal of deferred compensation — — (1,691 ) — — — $ (1,691 ) that did not vest Purchase of treasury — — — (2,069 ) — — $ (2,069 ) stock Net (loss) for the — — — — — (1,239,034 ) (1,239,034 ) quarter ------------ - ------------- - Balance at September 18,011,077 $ 186,442 $ 76,658,269 $ (1,866,130 ) $ (5,585,571 ) $ (60,623,775 ) $ 8,769,235 30, 2019 ------------ - ------- - - ---------- - - ---------- - - ---------- - - ----------- - - ---------- - Balance at December 31, 16,874,235 $ 186,299 $ 74,041,083 $ (831,059 ) $ (7,012,544 ) $ (53,260,426 ) $ 13,123,353 2017 ---------- - - ------- - - ---------- - - ---------- - - ---------- - - ----------- - - ---------- - Issuance of common stock under equity 68,889 69 147,231 — — — 147,300 incentive plan Deferred compensation — — — — 227,078 — 227,078 amortization Purchase of treasury — — — (956,134 ) — — (956,134 ) stock Net (loss) for the — — — — — (1,050,806 ) (1,050,806 ) period ---------- - --------- - ------------ - ------------ - ------------ - ------------- - ------------ - Balance at March 31, 16,943,124 $ 186,368 $ 74,188,314 $ (1,787,193 ) $ (6,785,466 ) $ (54,311,232 ) $ 11,490,791 2018 ---------- - - ------- - - ---------- - - ---------- - - ---------- - - ----------- - - ---------- - Issuance of common stock under equity 28,223 28 74,319 — — — 74,347 incentive plan Issuance of common stock, 100,000 100 179,900 — (180,000 ) — — employees, restricted Issuance of common 5,000 5 7,906 — — — 7,911 stock, restricted Deferred compensation — — — — 229,655 — 229,655 amortization Reversal of deferred compensation (6,667 ) (1,000 ) (16,000 ) — 11,475 — (5,525 ) that did not vest Purchase of treasury — — — (2,942 ) — — (2,942 ) stock Net (loss) for the — — — — — (1,035,438 ) (1,035,438 ) quarter ------------ - ------------- - Balance at June 30, 17,069,680 $ 185,501 $ 74,434,439 $ (1,790,135 ) $ (6,724,336 ) $ (55,346,670 ) $ 10,758,799 2018 ------------ - ------- - - ---------- - - ---------- - - ---------- - - ----------- - - ---------- - Issuance of common stock under equity 10,500 11 70,021 — — — $ 70,032 incentive plan Deferred compensation — — — — 219,006 — $ 219,006 amortization Reversal of deferred compensation (60,000 ) (65 ) (132,530 ) — 132,595 — $ — that did not vest Purchase of treasury — — — (7,307 ) — — $ (7,307 ) stock Net (loss) for the — — — — — (813,166 ) (813,166 ) quarter ------------ - ------------- - Balance at September 17,020,180 $ 185,447 $ 74,371,930 $ (1,797,442 ) $ (6,372,735 ) $ (56,159,836 ) $ 10,227,364 30, 2018 ------------ - ------- - - ---------- - - ---------- - - ---------- - - ----------- - - ---------- -

USIO, INC RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (UNAUDITED) ----------------------------- ------------------------------ Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2019 2018 2019 2018 -------------- ------------ -------------- ------------- Reconciliation from Operating (Loss) to Adjusted EBITDA: Operating (Loss) $ (1,228,467 ) $ (822,916 ) $ (3,582,238 ) $ (2,915,115 ) Depreciation and amortization 491,749 473,225 1,475,291 1,389,164 ------------ - ----------- - ------------ - ------------ - EBITDA (736,718 ) (349,691 ) (2,106,947 ) (1,525,951 ) Non-cash stock-based compensation expense, net 315,259 289,038 954,770 961,893 Adjusted EBITDA $ (421,459 ) $ (60,653 ) $ (1,152,177 ) $ (564,058 ) - ---------- - - --------- - - ---------- - - ---------- - Calculation of Adjusted EBITDA margins: Revenues $ 7,087,732 $ 6,473,743 $ 20,833,143 $ 18,601,283 Adjusted EBITDA (421,459 ) (60,653 ) (1,152,177 ) (564,058 ) ------------ - ----------- - ------------ - ------------ - Adjusted EBITDA margins -5.9 % -0.9 % -5.5 % -3.0 % ------------ - ----------- - ------------ - ------------ -